The state Supreme Court
yesterday overturned a ruling giving the ex-wife of a former sheriff a
community property interest in California Public Employees’ Retirement System
benefits that he earned during a previous marriage and later repurchased with
community funds.

The justices, in a
unanimous decision, held that the use of community funds to redeposit CalPERS
contributions entitles the community to an interest only in that portion of the
retirement benefit consisting of a member-funded annuity.

A Monterey Superior
Court judge and the Sixth District Court of Appeal, Justice Marvin Baxter wrote
for a unanimous court, erred in granting the retiree’s subsequent spouse an
interest in his employer-funded pension.

The ruling is a victory
for former Monterey County Sheriff Gordon Sonne, who was a deputy sheriff for
27 years and sheriff for four years before retiring in 2002. After he and his
second wife, Dalia Sonne, divorced, she elected to cash out her share of the
community interest in his CalPERS benefits, and he later elected to repurchase
those credits, using funds that were the community property of him and his
third wife.

Superior Court Judge
Robert O’Farrell, hearing divorce proceedings between the former sheriff and
third wife Theressa Sonne, ruled that the repurchased service credits were
community property to the extent commingled community funds were used to pay
for them. He calculated the community interest in the repurchased credits at
more than 70 percent, equivalent to the percentage of the redeposited
contributions that had come from community funds.

The Sixth District Court
of Appeal held that the ruling was not an abuse of discretion.

Baxter, however,
explained that under the CalPERS retirement plan, a retiree gets a monthly
payment consisting of both an annuity—paid for by the employee through payroll
deductions—and a pension, funded by employer contributions.

The lower court rulings
were error, the justice said.

“The Court of Appeal’s
commingling analysis rests on the erroneous legal assumption that Husband’s
retirement benefit was a unitary and indivisible asset,” he wrote.

The redeposit—using
community funds—of a portion of Sonne’s contributions, Baxter elaborated, only
affected the annuity portion of the benefit.

“The obligation of the
employer to contribute to the pension component, on the other hand, derived
from Husband’s service during the Husband-Dalia marriage,” he wrote.
“Accordingly, the community had a claim only on the annuity component relating
to the time period of the Husband-Dalia marriage, and was entitled only to a
pro tanto share of that portion of Husband’s retirement allowance.”

On remand, Baxter went
on to say, the court may recalculate the community interest by tracing the
community contributions to the annuity, and accumulated interest thereon, or by
another method the court finds to be appropriate and consistent with the high
court’s opinion.